Wrong official forecasts will produce the wrong budget

The Budget this week will doubtless be damaged and misdirected by wrong official forecasts. The Office of Budget Responsibility is meant to be independent, yet Chancellors seem obliged to use these forecasts and defend them. Given how wrong they usuallyĀ  are it places the government in a false position and misleads them over what is the proper policy response. Indeed, it leads officials to recommend advice which will slow the recovery and worsen the outturns.

The OBR and Treasury officials are wedded to Maastricht austerity economics. They slavishly publish the UK’s position against the Maastricht debt and deficit criteria as if we were still in the EU and had to comply with the Treaties. They will doubtless inveigle the old Maastricht debt and deficit requirements back into a so called new statement of economic policy aims and controls for this BudgetĀ  despite Ministers rightly wishing to review the framework.

If you are going to steer economic policy around debt and deficit figures you need to be able to forecast them accurately and understand what actions balloon deficits and which ones reduce them. Last year I drew attention to the wildly pessimistic budget deficit forecasts. The outturn was first published as an overstatement of a massive Ā£90 bn in the deficit, even larger than I had dared to suggest.Ā  It was subsequently adjusted down to Ā£64 bnĀ  by proposing that there will beĀ  some hidden losses yet to be determined to add toĀ  last year’s figures. I repeated the claim that this year’s budget deficit was also substantially overstated. At the half year stage it turns out the deficit was overstated by a whopping Ā£43 bnĀ  in just six months.

The main reason is the OBR and Treasury underestimate the buoyancy of revenue in an upswing, and have false models of tax revenues which depress revenues when you cut rates without allowing for behavioural effects which increase transactions and outputĀ  with lower rates. Thus we see that in the year to date Stamp Duty has risen by a massive 85% thanks to a mixture of unlocking and the lower tax rates the Chancellor wisely introduced. Corporation Tax is up 20% despite the ChancellorĀ  offering a super deduction for investment which officials are nervous about reading their latest published report.

The Chancellor should announce a strong commitment to low inflation, underlining the 2% inflation target which we are currently breaking. He needs to target tax cuts, regulatory actions and government procurement on scarcity areas where prices are under upwards pressure and offer supply side reforms to boost capacity. Energy, transport, domestic food growing, domestic timber and others are obvious areas.

There should then be a growth target, to send a clear signal to all of government that there is work to be done to boost the growth rate and the productivity rate with great education, training, network investments, incentives for the self employed and small businesses and innovation.

The state debt is currently stated as Ā£2.2tn or 95% of GDP. As the state will own Ā£875bn Ā of the debt by year end the true figure is Ā£1.325 or 57% of GDP. This is a manageable amount at current low interest rates. Because the OBR grossly overstate the deficit they will demand tax rises which will slow the economy , damage Ā confidence and impede Ā rectifying supply shortages.

 

( text amended to include all QE to date, not just more recent)

174 Comments

  1. Shirley M
    October 24, 2021

    W=Please excuse my anger, but what is wrong with the governments handling of the public sector? I truly hoped Cummings would be allowed to knock them into shape. The majority appear to be wholly incompetent or defiant, but not only do they retain their jobs but they seem to get rewarded for failure. I have a little sympathy for MP’s and Ministers, as they are NOT experts in their fields and rely on professional advice from the public sector and quangos.

    What really annoys me is why we pay these incompetents and reward them. It needs to be made much easier to dismiss them WITHOUT the massive public pensions, golden handshakes, and gongs. This is where the private sector thrives and the public sector fails miserably. It can be difficult to sack people in private business due to false claims of discrimination, etc. but I cannot recall a useless or traitorous public employee ever being dismissed without the requisite golden handshake and guaranteed final salary pension.

    1. Shirley M
      October 24, 2021

      I apologies for the typo at the beginning with the totally unnecessary W=.

      1. Hope
        October 24, 2021

        Well said Shirley. I am surprised JR keeps on blaming others for his party and govt.ā€™s own failings. They have been in power for 11 years! Who created these quangos JR moans about? His party and govt.! Maude was going to sort them out, recently Cummings. Years of hot air and fake promises. All talk and no action.

        Where are the selection procedure changes, promotion changes from the institutional left wing bias of Blaire, same for judiciary, police, BBC etc. Bonfire of quangos turned out to be increase in number!!

        Johnson has not got the gumption to force the civil service, MoD etc to return to work!

        We literally cannot afford for JRā€™s party or govt to be in power they are intent on taxing us until our pups squeak. Trying to force us not to use cars, forcing industry abroad to our alleged enemies, forcing us not to use cars. Failed on economy, failed on law and order, failed immigration failed on Brexit. Every policy is another disaster/crisis created by Trolley Johnson, crashing at every turn just as Cummings described.

        Tory party policy blame everyone else, if that fails blame world events!

      2. harryagain
        October 24, 2021

        The NHS was c***ed up when the government parachuted in “experts” from commercial institutions to run run it. These people hadn’t got a clue.
        Previous to this, the people in charge had worked their way up from the bottom and had detailed knowledge and most importantly commitment to the NHS. They cost the taxpayer Ā£millions with foolish re-organisations not to mention today’s chaos and incompetence.

        1. Hope
          October 24, 2021

          Simon Stevens was a policy advisor to Blaire. You would have thought the Fake Tories first job wwas to oust him. Same for many quangos who had and have Blaireā€™s left wing chumocracy.

          Cameron appointed Odonis! He also appointed other former Labour ministers like Milborne to posts!!

          1. DavidJ
            October 24, 2021

            +1

    2. Fedupsoutherner
      October 24, 2021

      Well said.

    3. Andy
      October 24, 2021

      You think the majority of nurses, teachers, firefighters, soldiers, police officers are ā€˜wholly incompetent and defiantā€™? You think they are ā€˜traitorousā€™.

      I think the vast majority of public sector employees are decent, hard working and honourable. I donā€™t resent my taxes paying their salaries at all. I do resent my taxes funding the pension handouts of etc

      1. No Longer Anonymous
        October 24, 2021

        Andy, true enough but the public sector is one where incompetents cannot lose their jobs.

        1. Lifelogic
          October 24, 2021

          And incompetent state organisations cannot go bust, nor do they have to compete as with the police, NHS, state education, defence, law and order, the court system, planningā€¦

        2. Andy
          October 24, 2021

          It is certainly true that most of the current members of the government would have been fired for incompetence if they worked in the private sector.

      2. MWB
        October 24, 2021

        I resent my taxes paying for your children. Pay for your own if you want to have them.
        I have paid for my pensions.

      3. Mike Wilson
        October 24, 2021

        I have paid for my pension by paying taxes and NI for 48 years. I still pay income tax, VAT and Council Tax. A pittance the pension may be, but it is not a ā€˜handoutā€™. If you donā€™t want me to have it, retrospectively repay some of the massive amounts of tax, NI, VAT, duties on fuels etc. that I have paid over the last 50 years including the assumption of retrospective investment over that period. Otherwise, just shut up with your puerile drivel.

        1. John C.
          October 24, 2021

          Mike, I keep saying, just ignore him or take the Mickey. He only wants to stir you up, and he’s grinning at you right now.

        2. Andy
          October 24, 2021

          You havenā€™t paid as much in to the system as you now take out of it. That is the problem. Somebody has to fund the shortfall for all your handouts – it isnā€™t you.

          1. graham1946
            October 25, 2021

            Well, you’ve certainly had a good whack out of it – free Uni education, feed-in tariffs for your roof panels, discount on the electric car, no road tax, no petrol tax/vat. For the record, people paid in for up to 50 years, with a life expectancy after retirement of about 15 years on the worst pension in the developed world. You are rich on the backs of the poor, you wish your elders ill, then you have the gall to spout ‘decency’.

        3. Dave Andrews
          October 24, 2021

          Your taxes and NI contributions just paid for the bills of the day, and even then didn’t cover what the government was spending in most of those years.
          Your state pension is paid out of taxes and borrowing of today, nothing was put by for your future, unlike any occupational pension you might have.

          1. graham1946
            October 25, 2021

            That is not our fault, with the government ponzi scheme that is NIC. Actuaries have worked out that had we been allowed to put the money into pensions ourselves, the current pension would be about Ā£20,000 per year, even allowing for the poor pension returns of recent years.

      4. Everhopeful
        October 24, 2021

        Not a ā€œhandoutā€.
        A deferred salary.
        An accrued benefit.
        If you thought the terms and conditions were/are so good, why didnā€™t you get a job in the public sector?
        Anyone is free to apply.

      5. Donna
        October 24, 2021

        I worked with quite a few Civil Servants who were lazy, incompetent and utterly useless at their jobs. If you were unfortunate enough to be saddled with one in your team the only way to get rid of them was to engineer a move sideways. They are a protected species.

      6. miami.mode
        October 24, 2021

        Andy, you’ve obviously deliberately misunderstood what Shirley has writtne. The thread of our host’s post relates to the Treasury and the OBR and Shirley has commented on the ministers and mandarins therein plus others in a similar capacity in other ministries. If you were at school you would have been told to pay more attention.

        1. Fedupsoutherner
          October 24, 2021

          Did he go to school? I only ask as he doesn’t seem to understand much of what he reads.

          1. graham1946
            October 25, 2021

            Says he went to Uni – seems about right with his Student politics ideas.

      7. harryagain
        October 24, 2021

        People working in the NHS pay into a pension fund. It’s deducted from their wages.
        The problem is, there’s no “fund”.
        The government just spends it as if it were tax receipts.

      8. John Hatfield
        October 24, 2021

        Are you saying that when you become a pensioner you won’t draw the state pension Andy?

    4. turboterrier
      October 24, 2021

      Shirley M

      Do not think you are alone with this Shirley it has always seemed utter madness to reward failure. If as in the private sector, failure nearly always resulted in dismissals. For many behind governments doors it is situation normal, jobs for life with all the trimmings.

      1. Hope
        October 24, 2021

        The govt does not have any money it only has our taxes! Any future spending or borrowing is tomorrowā€™s tax rises. This idiotic govt. borrows money with interest to give away!! Worse it makes it law what percentage it will give away. Our taxes. More emphasis needs to be made this is our taxes, our money we could spend on our family, household or charity if WE wished. Not reckless Johnson and his party of economically illiterate wasters.

        1. DavidJ
          October 24, 2021

          +1

    5. Nottingham Lad Himself
      October 24, 2021

      Oh, angry again, eh?

      Wasn’t everything that was wrong caused by the UK’s membership of the European Union?

      Apparently not, it seems.

      Incidentally, pension funds – either the public or private sector – are the property of the beneficiaries.

      Would you prefer that people could be robbed of them?

      You right wingers are consummate suckers for the Politics Of Envy as ever.

      1. JoolsB
        October 24, 2021

        In the case of public sector pensions, they are rightfully the property of taxpayers who are forced through their taxes and exorbitant council taxes to provide pensions in the public sector many of them can only dream of. The public sector pensions bill is now bigger than the national debt. Itā€™s time their pensions were subject to the markets the same as those in the private sector.

        1. harryagain
          October 24, 2021

          Public sector workers have a deduction from their wages to fund their pension.
          The government however just spends it.

        2. Nottingham Lad Himself
          October 24, 2021

          No, many, e.g. councils are fully funded, and their members have often already been moved to defined contribution from defined benefit terms, certainly for new staff. They will retain the final salary element only to the point accrued before the change.

          There was nothing to stop anyone with the needed qualifications from applying for a public sector job either.

          Is the real point that you did not have those, and wish to harm those who did?

      2. Shirley M
        October 24, 2021

        Civil servant pension employer contribution rates for 1 April 2021 to 31 March 2022, is between 26.6% and 34.1%. That is one VERY generous perk at the expense of the taxpayer. Employee contribution rate is 4.6% to 8.05%, so some lucky civil servants get an additional 34% of their wage paid into their pension fund at no cost to themselves, and are in a nice safe job for life, or as long as they want it.

    6. GilesB
      October 24, 2021

      Too many ā€˜expertsā€™ are not objective. They have their own personal political objectives, and choose assumptions for their models in line with their agenda. I donā€™t believe them

      I have supported the Conservative Party for fifty years.

      My vote will be going to any party that votes to scrap the Net Zero target. The target is totally arbitrary. It wonā€™t be achieved.

      Seeking it will destroy our economy and our way of life.

      Blue should be better than green: true conservatism blends care for the environment with pragmatism

      1. SM
        October 24, 2021

        +1

    7. Ian Wragg
      October 24, 2021

      Well said. Getting into our Gp is worse than Fort Knox.
      Local council incapable of keeping streets clean. Intermittent collection of garden waste and more.
      Overloaded with WFH managers down the gym.

    8. JohnE
      October 24, 2021

      Always someone else’s fault isn’t it? Nothing to do with the fact that you voted a chaos monkey buffoon into power.

    9. jerry
      October 24, 2021

      @Shirley M; “what is wrong with the governments handling of the public sector? ..//.. The majority appear to be wholly incompetent or defiant”

      Probably due to the class of management the electors chose to run UK Plc….!

      “I have a little sympathy for MPā€™s and Ministers, as they are NOT experts in their fields”

      Indeed, for the last couple of decades or so far to many MPs only ever seem to have PPE degrees or similar, perhaps experience of working in a public relations role, now compare that to how politics used to be done, most MPs would have either come via the boardrooms or via trade unions up from the shop floor, far to many MPs now only seem to have had one career – politics.

      1. JoolsB
        October 24, 2021

        +2

      2. Hugh Clark
        October 24, 2021

        +1

    10. DavidJ
      October 24, 2021

      +1

    11. Mark B
      October 24, 2021

      Heavily unionised. Jobs for the Chumocracy. Too big to fail. Difficult to take on dues to all the aforementioned and associated interests.

      One would have hoped that, with a government with an 80 seat majority and 5 years to get to work, something would have been done. But as we are coming to learn, there is a world of difference between a good speaker and a real leader.

      1. jerry
        October 24, 2021

        @Mark B; “Too big to fail. Difficult to take on dues to all the aforementioned and associated interests.”

        Shirley M was talking about management of the civil and public services,. not the privatised utilities/contractors!… šŸ˜›

        43 years after the the “Winter of Discontent” the hard rights never ending demonisation of the (civil & public service) trade unions is getting rather tiresome, even more so when the real problems are with management, the one area that has all to often been privatised and often de-unionised.

        1. Peter2
          October 25, 2021

          What are you referring to Jerry when you call anyone criticising the performance of the public sector and their salaries and pensions and early retirements as “the hard rights”

          1. jerry
            October 25, 2021

            @Peter2; Except I wasn’t doing anything of the sort, try reading my comment again, I was calling those who only ever blame trade unions all the time the “hard right”, especially when so much higher management are likely not to be unionised any more, if ever they were. I did not even pass comment on salaries, pension schemes or age of retirement etc, nor did Mark B, to who I was replying to.

          2. Peter2
            October 25, 2021

            How do you know those that criticise trades unions are all hard right?
            Interested to see your proof Jerry.

          3. jerry
            October 26, 2021

            @Petert2; True, they might well be of the far right…. šŸ˜›

            But then perhaps Peter2 things the Socialist Workers party routinely and regularly criticise the trade unions, criticise when they strike, or criticise the trade unions for management failings! Context Peter2, context, stop trying to troll by taking (sometimes single) words out of a wider context.

          4. Peter2
            October 26, 2021

            No I dont think that Jerry.
            Let’s go back to your original claim
            You said ” the hard rights never ending demonisation…….is getting rather tiresome”
            I asked you what were you referring to.
            A polite and reasonable question I think.
            And as expected you don’t answer and descend to using your troll response.

    12. Lifelogic
      October 24, 2021

      Well whatever ā€œwrong with the governments handling of the public sector?ā€ it is very clear we are paying the highest taxes for 70 years and we get almost nothing of any value back in the way of services or any real quality or value at all. But they are very good at thieving off motorists, ULEZ at Ā£12.50 a day or a Ā£260 fine (for the forgetful) is the latest scam.

  2. Everhopeful
    October 24, 2021

    Since The Club of Romeā€™s 1970s prediction ā€œLimits to Growthā€ ( foretelling economic catastrophe, naturally) we seem addicted to bizarre auguryā€¦always seeing future misery and desolation.
    Yet having made these forecasts nothing is ever done. Why for example when faced with a plague has the government not spent every single resource in creating a health service? It has had two whole years of doom and gloom to do so.
    Ditto with climate and economic witterings. Oh dear the skies are fallingā€¦letā€™s spend billions on shoving pointless swabs up peopleā€™s noses. Get the printing presses out! Yippee..a ā€œhousing crisisā€ā€¦letā€™s add to it!
    Why not try living in the present for a bit. Do some actual problem solving instead of headless chicken reaction to a bunch of dodgy divinations.
    Give us all a break!

    1. turboterrier
      October 24, 2021

      EvĆØrhopeful

      +1 Well said

      1. Everhopeful
        October 24, 2021

        +1
        ThanksšŸŒø

    2. Nottingham Lad Himself
      October 24, 2021

      If you do not bother to examine the possibilities of things going wrong, then you reduce your chances of averting them.

      No one did sufficiently with the privatisation of monopolies with captive markets etc., did they?

      1. miami.mode
        October 24, 2021

        Cannot quite agree with you there NLH. Whilst rail and water have turned out badly there is ample competition in gas, electricity, parcel deliveries, and telecoms which was not available with the old “boards” or Post Office. Even the Royal Mail is currently offering to collect small parcels in some areas for a small fee.

  3. Mark B
    October 24, 2021

    Good morning.

    Garbage in, garbage out !

    How did this nation cope without all these government created QUANGO’s ? Back before these were created, and even before the EU, the government of the day and its Ministers took responsibility for managing the nation’s affairs. Why is therefore, with so much now devolved governments, from assemblies too city states the affairs of this nation seem to be so poorly managed ?

    If the OBR were a limited company and worked in the Private Sector, with such an appealing track record, does one think they would be worth employing ? Because to me, they seem very poor value for what they do.

    And why are we still running deficits and borrowing and printing so much money ? I thought all those EU and non-EU immigrants the government have waved through over the years should be contributing so much they would not have to.

    Why cannot government cut its cloth to suit its purse ? Why does it feel the need to keep current spending levels, or greater, and tax, borrow and print ?

    Many here are coming to the conclusion that we have very poor administrators, both in parliament and the Civil Service.

    I think it is high time to take out the garbage !

    1. Lifelogic
      October 24, 2021

      Indeed garbage in garbage out – rather like their climate modelling.

      The ā€œindependentā€ office of budget responsibility is about as much use as the ā€œindependentā€ Office of Tax Simplification created on 20 July 2010 by Osborne(?) since when the tax code must have nearly doubled. The Government clearly think everyone should either work for the Government or in compliance, accounting, HR compliance or pushing premature green crap and expensive intermittent energy products at people or road blocking or servicing motorist mugging cameras. This making the UK wonderfully inefficient with low productivity.

      We need much lower simpler taxes, much less government and much less parasitic government waste.

      1. Lifelogic
        October 24, 2021

        So today Londoners get ULEZ Ā£12.50 a day up to Ā£4,500 PA to force you to buy an electric car (that save no CO2 in general) and render you old car valueless. The government is at war with the voters.

        I note that Black Cabs are exempt and yet they are far worse than normal cars as they need a professional driver, are large vehicles and do about half of their mileage without even a passenger on board. So double mileage for each useful mile. Perhaps one needs to get a black cab then rent it out when not using it yourself?

        I wonder how many extra cycling and pedestrian deaths will result? Home many disabled will be unable to go out at all. Note you have to be home by midnight or you pay 2 times the Ā£12.50 or get mugged for Ā£160 fine x 2.

        1. alan jutson
          October 24, 2021

          Indeed the now larger ULEZ has made owing an older car or van much more expensive if you live or are going to do business in the area, in addition Parking, if you can find a slot, needs to be added to the other increased charges.
          A local builder who does much work in London, charges his Customers Ā£100 per day extra per vehicle, 0n top of his normal labour fees for all of the hassle, delays, emissions, congestion, and other permits of getting a vehicle on, or near to the work site.

          1. Lifelogic
            October 24, 2021

            +1

        2. Nottingham Lad Himself
          October 25, 2021

          It does not force you to buy an electric car.

          Most petrol and diesel vehicles of recent manufacture are ULEZ compatible.

      2. DavidJ
        October 24, 2021

        +10^3

    2. Oldtimer
      October 24, 2021

      GIGO was my first thought on reading today’s Diary. IIRC the OBR, when first set up, comprised the Treasury unit that previously made these forecasts but with an outsider appointed as Head of the unit. We should not be surprised if it does not sound independent because it was and probably still is so closely aligned with the Treasury.

    3. turboterrier
      October 24, 2021

      Mark B
      Garbage out.
      In your dreams Mark it will never happen. The biggest waste in government organisations is that created internally and never properly managed. Abdication of responsibility.

    4. JoolsB
      October 24, 2021

      Bang on Mark B but we need a Conservative Chancellor and a Conservative Government to cut out all the waste and reduce spending. We were conned by Johnson and his fake Tories into voting for his high tax, big spend, nanny state, anti business, anti family, pro immigration, green crap Government. Never again.

    5. Hope
      October 24, 2021

      Mark,
      Why is there a need for an OBR!! We have a Treasury that our taxes pay for and ministerial depts as well!

      We paid more in overseas aid and EU, even though we left, than some public sector bodies! And Johnson still used NIC as an excuse to get his foot in the door to TAX us more!

      The rot starts with govt.

      It can get rid any public sector dept or quango it so chooses. It can change any public sector body it chooses. It can stop or start spending our taxes however it wishes.

      All these current supply chain issues are the govt.ā€™s fault despite the lies Johnson says. It was a consequence of his lock down. He chose the type and style of lock down but does not want the responsibility of his actions just like his chaotic misfit private life. The countryā€™s finances are now starting to mirror the same reckless style of his private life. Johnson thinks it is okay to say anything no matter how untrue it is as long as it gets him off the hook.

    6. Hugh
      October 24, 2021

      +1

  4. formula57
    October 24, 2021

    You make clear there is an appealing alternative to what we are going to get that we could realistically have instead.

    Why do we have to put up with Chancellor Sunak’s damaging and wrong-headed alternative?

    1. Andy
      October 24, 2021

      There isnā€™t an alternative to tax rises. It is cloud cuckoo land stuff. The OBR are experts. Mr Redwood isnā€™t an expert at anything – except being wrong.

      reply Iā€™ve been right on the gdp and deficit forecasts, OBR wrong. was right about ERM damage and the banking crash. Do try to show some understanding and judgement instead of always rubbishing everything I write.

      1. Mike Wilson
        October 24, 2021

        The OBR are experts.

        I like to start the day with a good chuckle. You do not disappoint. Although that particular sentence caused me to laugh out loud, as they say.

      2. Nottingham Lad Himself
        October 24, 2021

        Oh, I think that Sir John is rather adept at doing his bit to sustain the widespread public misconceptions which are a precondition for their voting Tory or having voted Leave, Andy.

        His particular skill lies in not actually repeating the lies told by others, which they have believed to arrive at that point, however.

        This site apparently gives free rein for volunteers to continue to repeat them here, on the other hand.

        1. Peter2
          October 24, 2021

          NHL I never understand why you post endlessly on here if you dislike the blog so much and all those who come on and comment.

      3. DavidJ
        October 24, 2021

        -1

      4. John C.
        October 24, 2021

        He’s got you, Sir John. He’s poked you with a stick, and to his delight you’re snarling. Either kick him off or ignore him.

      5. Micky Taking
        October 24, 2021

        Sir John, perhaps you haven’t noticed but most on here rubbish, with some cause, almost everything the youngster writes.

  5. SM
    October 24, 2021

    Sir John – I have no training in economics, statistics or finance; I just ran my family’s budget for 50yrs and helped look after that of two relatives when they were no longer able to cope. Major decisions about life insurance, pensions and investment were shared with my husband and a financial advisor. We survived seriously bad times because I was always careful in the good times.

    In simple terms, it seems to me that the OBR was meant to act as a personal financial advisor to Government – if they keep getting figures and subsequent advice wrong, why is nothing done about it?

    1. Lifelogic
      October 24, 2021

      “I have no training in economics, statistics or finance” – usually an encouraging sign. I note many group think people at RBS, equitable life, Fannie Mae and Freddie Mac, Halifax, Northern Rock and many/most of the enthusiasts for the ERM/EURO did.

      1. alan jutson
        October 24, 2021

        Lifelogic

        Please do not remind me about Equitable Life, It took Gordon Brown and the Treasury 10 years to realise they got it wrong and even think about compensation, because the Financial Services Authority also did not have a clue what had been happening 10 years before that either. Likewise the Auditors reported nothing amiss.
        Thus three so called expert organisations all got it wrong. But to the best of my knowledge no one in any of those three organisation lost any money or got sacked.
        Would you trust a so called self proclaimed expert who had no skin in the game.?

        1. Lifelogic
          October 24, 2021

          My parent were cheated them too by them. The auditors got of scot free I think, the much delayed compensation was derisory.

    2. Dave Andrews
      October 24, 2021

      I take it whilst running your family’s finances, your position wasn’t determined by a ballot box and your children (I infer you had them) didn’t have a vote on their pocket money allowance.
      I believe the government should regulate spending according to income, so pensions and benefits are rationed according to tax receipts. Put some by each year to pay down the national debt a little, so as to relieve the next generation of liabilities they don’t deserve. If individuals and businesses paid less to support a bloated state, they would have more to speculate on investments of things the country needs.
      Politicians however are more interested in bribing the electorate to gain votes. The gullible people vote for them. I blame the electorate.

      1. Mark B
        October 24, 2021

        I do not necessarily disagree but. I would rather blame those who vote but do not contribute sufficiently enough to pay for such government largess.

      2. Lifelogic
        October 24, 2021

        Indeed. Google ā€œThe big rock candy mountainā€ song. But hard to blame the voters when the only ā€œchoiceā€was Boris or Corbyn?

    3. Enrico
      October 24, 2021

      Well said SM.Itā€™s all about logic and common sense which your article delivers fully.

    4. alan jutson
      October 24, 2021

      SM
      +1

  6. DOM
    October 24, 2021

    Such deviant revisions and wild adjustments to previous budgets by government and public officials is utterly preposterous and suggests deliberation, malice and forethought. Nothing happens in today’s politics without a reason, all is deliberate and all is intended for political effect.

    No one trust’s the political State anyway. It’s become a nasty, venal vested interest designed to feed off the private sector like a lethal virus infecting a healthy body.

    Until we get a party in government that is wedded to sound money, lower state spending and honest State governance such open abuse will simply accelerate

    As an aside. Last night, I watched Neil Oliver on GB News expose this Socialist government and Johnson regarding attacks on personal freedom, use of collective punishment, compliance and consent and psychological warfare against our nation’s people. It was moving to watch and reveals two parties in Parliament who have now become a vicious and existential threat to our civil and moral way of life

    We are not living in a democracy and GB News is exposing the evil intent of the British political, academic, cultural and bureaucratic class

    1. Everhopeful
      October 24, 2021

      +++
      Yes!! 100%.

      1. Hope
        October 24, 2021

        Well said Dom. It clear to most reasonably intelligent people this not a conservative govt or party in anyway shape or form. Culturally Marxist in its brainwashing through BBC, education, legislation and policy.

        Putin last week called the west out for crimes of humanity for brainwashing young children for claiming a boy could be a girl in school! Called out by Putin for goodness sake. The sad part is he is spot on!!

    2. Everhopeful
      October 24, 2021

      Neil Oliver ā€œI wonder how stupid they all think we are?ā€ Speaking of all the authoritarian world ā€œleadersā€.
      He made such a brilliant video and the answer to his question is ā€œVeryā€.
      The so called ā€œ leadersā€ are now achieving levels of farce not seen since Monty Python.
      Where is the need for jabs and lockdowns and masks when they apparently have not worked before? Lying doesnā€™t work all that well either.
      Actually, for a habitual liar our PM isnā€™t a very GOOD one!

      1. Bryan Harris
        October 24, 2021

        +9
        I’m beginning to like Neil Oliver.
        I wasn’t a fan when he was doing those history programs – they were so politically correct – but I have to admire now his forthright manner in saying it how it is…

        1. John C.
          October 24, 2021

          Bryan, he does give the impression of someone who’s seen the light. Was he a BBC man, and is now a free agent? If so, that would explain everything.

        2. Everhopeful
          October 24, 2021

          Exactly what I thought re his history progs.
          And now he is a treat to watch!

      2. Hat man
        October 24, 2021

        Everh.: I wouldn’t be so harsh. You’re not stupid if you just don’t know something. If people get information from propaganda channels they take to be reliable in a public health emergency, they simply won’t know what those channels fail to tell them. Oliver is an academic researcher who’s trained to think for himself and find things out, and has been paid to do so. Unfortunately, most working people don’t have that luxury. The sad fact is that propaganda generally works. At least for quite a while.

        1. Everhopeful
          October 24, 2021

          No.
          Neil askedā€¦.How stupid do world leaders think we are?
          I saidā€¦.the world leaders think we are ā€œveryā€ stupid.

          Judging by comments I see on line and the demos going on all over the world people (we) know exactly what their game is.
          We are not stupid.

          I do hope this isnā€™t too harsh for you but do try reading more carefully!

    3. Fedupsoutherner
      October 24, 2021

      GB News is brilliant. They manage to explain all kinds of issues in depth. They reveal so much that the BBC doesn’t. One wonders if the journalists on the BBC really understand what they are reporting on.

      1. MWB
        October 24, 2021

        Well, the main presenter on the Radio 4 news at 1700 each weekday, doesn’t understand the difference between internet connection speed and w-fi.

        1. Lifelogic
          October 24, 2021

          Andrew Marr xxxxxx today talked about heat pumps and ā€œair pumpsā€ when he ment ā€œair source heat-pumpsā€ an air pump is called a fan Marr. Someone else on radio called heat pumps ā€œwater pumpsā€ so great is their knowledge!

      2. Nottingham Lad Himself
        October 24, 2021

        Yes, astrologers will go on at some length about the “solid basis” for their conclusions if you give them the space too.

    4. Brian Tomkinson
      October 24, 2021

      +1

    5. Lifelogic
      October 24, 2021

      Certainly good to hear some sense on Talk Radio and GB news rather than the deluded lefty, green crap and woke lunacy we get from the BBC. Though to me even these channels do not go far enough. For example we need real and fair competition between state and private in Healthcare and education for example not second rate virtual state monopolies and a state sector and taxes of about half the size.

    6. Bryan Harris
      October 24, 2021

      +99
      Well said Dom

    7. Donna
      October 24, 2021

      Yes, Neil Oliver is a wonderful addition to the national conversation. His comments yesterday were inspirational.

      I hope he decides to stand for Parliament. We desperately need good, decent people like him in Westminster to stand up to the lefty authoritarians who infest the place.

      1. The Prangwizard
        October 24, 2021

        He should not stand for parliament. He is far more influencial where he is, where he is free to speak clearly. The corruption and amoral practises of parliament will be arranged to stifle him. When he started out in TV a while back I felt he was a bit above the others and with his book – Wisdom of the Ancients – it was clear. Then he turned up on GBNews. Total confirmation. And this is a keen Englishman praising a keen Scotsman!

    8. Jim Whitehead
      October 24, 2021

      DOM, +1, well said. !!!!

  7. turboterrier
    October 24, 2021

    Sir John
    With everything going on it would be very advantageous that all the politicians and the civil servant in all the financial sector of government read the following report:-
    The Worm in the Rose by Professor Prins published on the Net Zero Watch Web site as it highlights very clearly the plans being adopted and considered by our government let alone the rest of the western world are giving virtually control to China. Some if not a lot of this report is a touch of the bleeding obvious in the strategy being adopted by CCP.

    1. Hugh
      October 24, 2021

      Prof. Prins should be required reading followed by a test of comprehension for all MPs and the godawful Climate Change Committee. Failure to comprehend and act accordingly will mean loss of position – permanently. No BBC interviews for the losers, either.

  8. Oldtimer
    October 24, 2021

    GIGO was my first thought on reading today’s Diary. IIRC the OBR, when first set up, comprised the Treasury unit that previously made these forecasts but with an outsider appointed as Head of the unit. We should not be surprised if it does not sound independent because it was and probably still is so closely aligned with the Treasury.

  9. George Brooks.
    October 24, 2021

    Shirley M has put it in a ‘nutshell’ and we have a chancellor who could make these changes if he has the sort of support that Cummings would have provided. We have had 30 years of being told what to do by the EU and the officials in the Treasury think that it is their duty to continue to follow these practices. It is like a new company financial director being told what to do by the chief accountant.

    These mandarins in Whitehall should be put in their place and understand that they are ”servants” and should remember their place and be civil.

  10. agricola
    October 24, 2021

    To computer paraphrase, rubbish in ergo rubbish out.

    1. Micky Taking
      October 24, 2021

      possibly dodgy spreadsheet software, and an even worse error-strewn SUM calculation, produced by a fool.

  11. Nottingham Lad Himself
    October 24, 2021

    Wrong unofficial forecasts as to how wonderful brexit will be will produce the wrong deal.

  12. Sakara Gold
    October 24, 2021

    Whichever set of figures Sunak uses for his autumn budget he needs to be carefull about the money printing. The word in the City is that post Brexit, the global bond vigilantes are getting nervous. Thanks to this and the eye-watering, highly inflationary increase in the price of fossil fuels, the BoE issued a stark and clear warning last week that interest rates may have to rise next month. For our over-leveraged and highly indebted economy, this will be disastrous unless it is carefully managed.

    “As the state will own Ā£475bn of the debt by year end the true figure is Ā£1.75tn or 75% of GDP. This is a manageable amount at current low interest rates” This statement can be translated as “The BoE has printed Ā£475bn to buy in the Treasury’s debt and we are going to see if we can get away with even more”

    History tells us that money printing on this sort of scale inevitably leads to a hyperinflationary debt collapse, with vast sums of harder currencies leaving the country leading to a classic sterling crisis. Those who hold hard assets will preserve their wealth, and even prosper. Those without will be trying to live on Jobseekers Allowance and the food banks.

    Reply I am urging immediate end of printing!

    1. acorn
      October 24, 2021

      So called bond vigilantes are price takers not price makers. The Treasury can shut down a yield hike by threatening to buy up,without limit, any bond that goes above 2% say. The bond price will rise to bring the yield back to 1.99%.

      Can’t agree with any of JR’s last paragraph. But I agree that the OBR is irrelevant in an economy that issues its own currency. As is the Monetary Policy Committee; relics of Gold Standard thinking. Where did the figure of Ā£475 bn come from?

      reply B of England

      1. acorn
        October 24, 2021

        I query your number as BoE accounts says “To date we have bought Ā£895 billion worth of bonds through QE. Most of that sum (Ā£875 billion) has been used to buy UK government bonds. A much smaller part (Ā£20 billion) has been used to buy UK corporate bonds.”

        The BoE doesn’t have any money to BUY outright anything, it doesn’t need any except a few billion in petty cash. Its owner the Treasury has a bottomless pit full of Pounds Sterling. Hence, the Ā£20 billion of corporate bonds were bought with Treasury money. The Ā£875 billion of government bonds were payed for by shifting that amount from the Treasury securities account to its reserves (cash) account at the BoE.

        BTW. I have been extracting data from the UK’s IMF returns. It appears the UK government’s net worth is minus Ā£2,122 billion. It has total liabilities of Ā£4,688 billion ( 2.5 x GDP) and assets of Ā£2,561 billion. The ONS is showing Ā£2,867 billion in Consolidated Gross Debt, which is going the pass the record of Ā£3,011 in 2011, when two thirds of that number was used to bailout the banks.

        Don’t worry, the UK owes very little in foreign currencies. Foreigners holding UK Sterling bonds or Sterling physical assets are the ones who need to worry, they took the risk of investing in a foreign currency. That’s the beauty of having your own sovereign issued currency; and, an agile tax system (VAT principally) that can control inflation at economic sub-sector level. The UK can keep this up for decades no sweat.

        This would be a very good time to appoint a Treasury boss that understood MMT and how fiat currency economies can be made to work for full employment; and, price stability.

      2. Peter2
        October 25, 2021

        “Without limit”…are you sure acorn.
        Endless and limitless creation of money by the government.
        “Keep this up for decades” you say
        Already inflation is rising here and in America.

        1. Derek Henry
          October 25, 2021

          Because of a supply side shock Peter

          The constraint is the real resources and skills we have available.

          Inflation will disappear once the private sector sorts out the supply side shock.

          1. Peter2
            October 25, 2021

            Not if we do what acorn wants…continued creation of money over decades without limit.

  13. Javelin
    October 24, 2021

    Rishi is a strong Europhile and wants us to stay inline with Europe. He is steering the UK back into the IMF snake so we can rejoin the EU and the Euro.

  14. Bryan Harris
    October 24, 2021

    Wrong official forecasts will produce the wrong budget

    Pretty basic, but the government are not listening nor inclined to work with the concept.

    It’s not just wrong forecasting that is the problem though, we also have a raft of insidious netzero tax increases to look forward to, that will hit the average home very heavily. Thanks Chancellor.

    If democracy survives — and that is doubtful given the power grabs being made by governments and the global deep state This coming budget that promises so many hardships will likely be seen as the straw that broke the camels back in terms of public acceptance of emergency onerous powers.
    No doubt the chancellor is targeting tax increases to defuse this idea, but more people are certainly coming to understand the reality behind the brutal new laws and restrictions.

  15. Kenneth
    October 24, 2021

    Every Ā£ that the government takes from the People and spends on one of its project is one less Ā£ for the People to trade with.

    I guarantee that a chunk of that Ā£ will go towards some civil servant’s second home or swimming pool.

    All it will do is make the rich richer and the poor poorer

  16. Denis Cooper
    October 24, 2021

    Off topic, I have written to Sir William Cash suggesting that his European Scrutiny Committee should explore how much it would cost our economy if the EU suspended or terminated the trade deal in retaliation for the UK invoking Article 16 of the Irish protocol. Only 0.75% of GDP, according to the EU, as mentioned recently:

    https://johnredwoodsdiary.com/2021/10/22/good-and-bad-trade-deals/#comment-1270050

    Meanwhile the Irish broadcaster RTE reports that whatever the Times may have heard from other sources the UK government is sticking to its guns over the absurdity of the EU court policing the protocol:

    https://www.rte.ie/news/brexit/2021/1023/1255568-eu-negotiators-london/

    “There’s been plenty of speculation about governance this week but our position remains unchanged: the role of the European Court of Justice (ECJ) in resolving disputes between the UK and EU must end.”

    1. Denis Cooper
      October 24, 2021

      Meanwhile the Guardian is still trying to wangle it:

      https://www.theguardian.com/politics/2021/oct/23/uk-will-not-cave-in-over-role-of-european-court-in-ni-protocol

      ā€œLast week there were hints from Downing Street that Boris Johnson was prepared to accept a technical role for the ECJ as long as a new independent arbitration panel involving both sides was the first port of call for disputes.”

      Maybe like a magistrate’s court in the UK judicial system, with the Supreme Court at the top.

      “Some believe this is an elegant solution. As such an arbitration model was already agreed in EU-Swiss talks, it would not require another round of tough negotiations to get approval from EU member states.”

      That is, the EU member states would be content to have the EU court at the apex of the system in Northern Ireland as it is in Switzerland.

      “It could also address the complaint from unionist critics of the protocol over sovereignty.”

      Only if they were fooled into believing that the arbitration panel was at the top, not the ECJ.

      “Experts including Catherine Barnard, professor of EU law at the University of Cambridge, said that in reality disputes over the trade of goods rarely reach the level of the ECJ, with as few as 24 cases pending out of a total 1,045 on the Strasbourg court lists.ā€

      The professor may have forgotten that EU Single Market laws are only a small part of the total corpus of EU law, and just as six years ago I asked here:

      https://johnredwoodsdiary.com/2015/11/14/the-eu-and-democracy/#comment-789196

      “JR, if Norway only has to implement about a tenth of new EU laws to ensure continued conformity with the requirements of the EU Single Market, as Norwegian opponents of EU membership claim*, then should we not be asking what the other nine tenths of new EU laws are about?”

      so now we could ask how many of those 1.045 cases related to Single Market matters, and would be relevant to Northern Ireland while all of its businesses remained under all Single Market rules – whether or not they ever sent any goods across the open land border into the Irish Republic, which many would never do.

  17. No Longer Anonymous
    October 24, 2021

    A predictable raid on private pensions is coming.

    By what measure is this a Tory government ?

    Seriously. If you have a daughter tell her to get pregnant by a male anon and live off the state. Tell her not to bother with a career, saving or getting married.

    If you have a son then I pity you. Especially a white one.

    1. Micky Taking
      October 24, 2021

      There used to be the Army, the Church or Civil Service (you needed some brains) but if all else fails – be a politician (our host a significant exception).

  18. No Longer Anonymous
    October 24, 2021

    Please pass on to Boris that another lockdown ain’t happening.

    Take my own experience as an example. My Mum lives three hundred miles away and the previous lockdowns have taken its toll on her physical and mental well being. She is clearly much more infirm having been unable to get out, socialise, do things for herself. I’d say (and she does too) that this could well be her last year and she doesn’t want to spend any of it alone – even if there is a risk that she might die of a respiratory illness which – let’s face it (pneumonia) – most of us die of anyway.

    Boris can shut down and murder all the small businesses he likes but I’d go to prison rather than not see my Mum. Nor will he tell me whom I can have in my house of whose house I can visit.

    He’s a bluffer and an incompetent and simply cannot be trusted.

    1. glen cullen
      October 24, 2021

      Agree

    2. Barbara
      October 24, 2021

      NLA

      Well said. Most people are fed up to the back teeth of this nonsense.

    3. Everhopeful
      October 24, 2021

      + 1million.
      hear! hear!

  19. William Long
    October 24, 2021

    If you think the Budget is based upon incorrect forecasts, you should vote against it and persuade as many of your colleagues as possible to do likewise. I am afraid that is the only way the Government is likely to take any notice of you and make the Treasury and the OBR mend their ways. The Chancellor has clearly fallen under the Treasury’s spell just like all his predecessors, and if nothing else, he should be capable of taking Responsibility himself, and not hiding behind an unelected Quango.

  20. jerry
    October 24, 2021

    Forecasts are just that, forecasts, not every scenario can be predicted or even accurately modelled.

    If that is not the case why didn’t the govts own economic forecasts in the 1980s and early ’90s predict the second and third recessions of the Thatcher/Major era, if they did why didn’t the govt of the day alter their economic polices (even if that would have meant a U-turn), or is the real issue here political, not economic, hence why some will hate whatever the OBR says or forecasts?

    1. Peter2
      October 25, 2021

      I thought Sir John’s article showed that the OBR had got their recent forecasts wrong Jerry.
      There is no evidence in the article of “hatred of the OBR” for political reasons.

      1. jerry
        October 25, 2021

        @Peter2; Your point being what? As I said, forecasts are just that, forecasts, some will be spot on, some will be close, others will not, now many times does the Met office get their weather forecasts wrong, how many times did govts get their pre OBR era economic forecasts wrong (as I pointed out). As for no hostility towards the OBR, oh come off it, you have been reading our hosts site long enough to have read many such articles critical the OBR, he appears to have never liked the OBR, surely the only question is why.

        Reply I have often predicted their false forecasts and have every right to criticise them when they use public money to get it so wrong.

        1. Peter2
          October 25, 2021

          My point is exactly what I wrote in reply to you Jerry.
          Are you actually saying that forecasts by the Met Office or the OBR that turn out wrong on regular occasions should be left unmentioned ?
          Seems very odd to me.

          1. jerry
            October 26, 2021

            @Peter2; “[you think forecasts] that turn out wrong on regular occasions should be left unmentioned”

            Not at all Peter2 but I get the feeling that is exactly what you prefer, when there is no political mileage to be had from criticism, hence why you ignored what I wrote (originally) about the 1979-97 govt when they failed to forecast 5 million unemployed, failed to forecast the 2nd and 3rd Thatcher/Mayor era recessions or, if they did, failed to change policies to avoid those very damaging economic downturns – some people lost their businesses, even homes remember, far worse than anything the OBR has missed (so far). Surely far better to be overly pessimistic than overly optimistic. I, like most, have no problems when the Met Office forecast advises a force 9 gale but the day turns out of be balmy and becalmed.

          2. Peter2
            October 26, 2021

            No Jerry
            I am supportive of criticism of bodies such as the OBR and the Met Office when their predictions are shown to be wrong.
            That may help them to modify their computer models and improve their performances in the future.
            There is no hatred of the OBR as you claimed.
            Simple as that.

          3. jerry
            October 26, 2021

            @Peter2; If you believe in fair and balanced criticisms then great, I await your criticism of the current govt, perhaps even our host, along with the previous Thatcher/Major govts (just as many do with Heath, Wilson/Callaghan and Blair/Brown), given they all got their own (pre OBR) forecasts wrong to a greeter or lesser degree.

            I won’t be holding my breath though…

          4. Peter2
            October 26, 2021

            You live in the past Jerry
            What is the point of writing critiques of governments from 40 or 50 years ago?
            I will leave that project to proper historian’s

            Learn from your decisions and move on.
            It is 2021 Jerry.
            Come on get modern!

  21. Sakara Gold
    October 24, 2021

    This morning, the wind seems to have picked up and at 08:45:00 GMT was providing 40% (10.GW) of our electricity demand, today at current electricity prices wind is making a substantial contribution to the Exchequer under the CfD scheme. Even this late in the year solar is providing 2% and this morning my solar panels are generating 2.1kW, so I’ve put the washing machine on. Add in hydro, biomass and nuclear and carbon-neutral generation was providing 16.7GW or 62% of demand. CCGT has been severely cut back at 3.78GW or 14%. The three coal fired stations have been extinguished as they have run out of coal and the interconnectors have taken up the slack.

    In the northern hemisphere wind dramatically strengthens in the winter, when most of the wind turbine generation records have been made. There is probably enough of a safety margin – just.

    Thanks to the DWP Winter Fuel Payment Team and their Ā£200 contribution to my household budget, I intend to maintain my well-insulated house at a temperature of 24C this winter instead of last year’s 22C

    1. Micky Taking
      October 24, 2021

      24C? – You will have St. Greta banging on your door if she finds out.

    2. glen cullen
      October 24, 2021

      Now go back 10 years when we had coal, gas and nuclear power stations….and none of this was a worry or concern

      1. Sakara Gold
        October 24, 2021

        You go back ten years if you want to. I prefer to look to a future with ten million EV’s on our roads and I can breathe clean air – and not the rancid blue s**t that makes my eyes sting, produced by your ICE. Your dinosaur comment is pathetic

        1. glen cullen
          October 24, 2021

          ā€˜ā€™ From a national point of view, there has been a long-term decline in overall emission levels since 1970 due to a variety of industrial and legislative changesā€™ā€™
          https://publications.parliament.uk/pa/cm201719/cmselect/cmenvfru/433/43310.htm

          Our air has been getting cleaner year on year since 1970 ā€“ see government chart on link

        2. Peter2
          October 25, 2021

          What current cars emitt ” rancid blue ….that makes your eyes sting” SG
          Modern ICE cars with all their clean technology do not do this.
          Come off it.

  22. glen cullen
    October 24, 2021

    Every day weā€™re being drip feed the details of the budgetā€¦.there was a time when the budget day was sacrosanct without any leaks and it was a surprise to everyone

  23. Iain Moore
    October 24, 2021

    Not just a matter of looking at what is happening here, but what is taking place abroad, and whether our profligate spending can be continued in light of that . The tsunami of debt that Biden wants is world crippling , upwards of $6 trillion , this is/will have severe inflationary implications for us, and then there is China’s rotten property market that we are currently seeing in the collapse of Evergrande, with others expected to follow.

  24. Peter from Leeds
    October 24, 2021

    Sir John,

    Surely the treasury is aware of the Laffer Curve. If you tax nothing there is no money for defence, health, infrastructure etc… If you tax everyone 100% then nobody will produce anything and there will be no tax revenue. There is an optimum rate between the two extremes. It has been proved on many occasions that reducing some taxes has increased treasury revenue. The idea that increasing tax rates produces more tax revenue is blatantly not true. What are their “models” based on?

    Apologies for stating the obvious!

    1. Mark B
      October 24, 2021

      Ah but if everybody worked for the good of the State then everyone would be happy. Full employment and all you need.

      1. glen cullen
        October 24, 2021

        ā€˜ā€˜state is good, state is right, state worksā€™ā€™

  25. bill brown
    October 24, 2021

    Sir JR,

    An interesting and useful perspective as taxes have risen too much.

    However, why do you keep talking about the Maastrict criteria, they ahve been suspended in the Eu as well, so where does the relevance come in?

    REPLy U.K. still reports on where we are in relation to the debt and deficit targets. Do not try and lie about this.

    1. Nottingham Lad Himself
      October 24, 2021

      Should the respective authorities also abandon any reference to how well or otherwise the UK is doing re air pollution standards in relation to European Union limits, Sir John?

      1. Peter2
        October 24, 2021

        Yes they should.
        The UK government should set its own targets.
        Just like other independent nations do.

    2. bill brown
      October 25, 2021

      Sir JR

      Who is talking about lying except you ?

  26. The Prangwizard
    October 24, 2021

    Government emphasis, urgently and at the highest priority, ought to be on supporting and growing home owned manufacturing businesses. Where it buys it must buy from home, where it offers finance it must be to home owned businesses. Where it builds skills it must be for home owned businesses.

    Trouble is, none of that is not of interest to ‘Boris’ and Sunak. He is offering it seems Ā£1.4m to foreign companies to come here instead. Just another example of them continuing with the prostitution of us all and our land.

  27. Newmania
    October 24, 2021

    Expert impartial judgements are often wrong. This is as true of the judicial system as elsewhere, but while we may all point out mistakes, what is the alternative? Mob rule, revenge, or the opinion of politicians who have transparently self serving agendas and care no more about what may be right, than you or I do? The OBR is not ,”wedded to Maastricht”, a sentence worthy of Monty Python. No it isn`t !
    John Redwood claims to have discovered taxes have dynamic effects in the economy. His life must be one of perpetual Eureka moments…” The sun will rise tomorrow I tell you! ” . We know John…we know..; the OBR also know. Furthermore he wishes to pretend that printing in money can simply be written off with no ill effect . Hardly ( as I have often tried to explain to him) .
    His chief error is on the the time -scale and persistence of inflationary consequences. This is odd for a man who experienced the 70s and here it seems unlikely he believes his own rhetoric. After allowing debt to swell and printing money in vast amounts for 2 years gestures at caution cannot be attacked as evil Eurocrat plottery by anyone who wishes to be taken seriously. Stagflation stalks us ..we do not know how close it is but in the present darkness we would be unwise to wander about un-.protected .
    I am personally undecided as to whether ” Go for Growth” or Retrenchment have more risks. What is clear , however is that all politicians wedded to Brexit want is to defer bad news until they can gallop out of Dodge
    and over the horizon. Ignore them, watch the inflationary news closely , consider how quickly interests rates can rise and think of the consequences in a Post Brexit recession complete with 70s style supply side problems.
    Things go wrong slowly , and then quickly.

    Reply This argument has nothing to do with Brexit.It is between the Japanese effect where continuous money creation and bond buying induces no inflation and the Latin American position where it leads to hyperinflation. I think we can get away with a one off money creation and bond buying for a one off CV 19 lockdown debt but not more which is why I have been calling for an end to QE

  28. Bob Dixon
    October 24, 2021

    Budgets are compared with Actual. How are previous budgets looking when compared to actual figures?
    Sir Johns comments need the past historical budget v actual to back up his criticisms.

    As things are It will take several years for The OBR to stop following Brussels.

    I find it very disappointing the OBR has not changed to a new model of forecasting.Have they not notice that we have left The EU?
    that The OBR

    Reply I am giving you outturn versus budget estimate!

  29. Donna
    October 24, 2021

    The Government could ignore the OBR. Or it could scrap it.

    But as with every aspect of the Civil Service/Public Sector, which has performed so badly over the past 20 years, (whether deliberately or through sheer utter uselessness) the Government does nothing whatsoever about it.

    There was hope that Cummings would bring a hard rain down on the institutionally left-wing Civil Service/Quangocracy and make it fit for the 21st century, but the current Mrs Johnson got him sacked and her husband hasn’t even got the cojones to deal with the BBC, let alone Whitehall.

    We had a wonderful opportunity with Brexit which Johnson has completely squandered with his economy-wrecking Covid policy and now intends to double-down on with his unaffordable, economically-illiterate Green obsession.

    1. glen cullen
      October 24, 2021

      I vote to scape the OBR

      1. Derek Henry
        October 25, 2021

        Well said Glen and the IFS

  30. Original Richard
    October 24, 2021

    ā€œThe Budget this week will doubtless be damaged and misdirected by wrong official forecasts.ā€

    Duff information and statistical trickery are one of the weapons used by the Marxist and pro-EU fifth column to obtain their objectives.

    We never seem to read of any senior person working for the civil service, or quangos or institutions such as the NHS, being sacked for providing misleading information or for incompetence, malfeasance, corruption or misbehaviour

    Amazingly, when they are found to be incompetent they are given golden goodbyes with pension pots increased and then employed elsewhere, often in the same job, not.

    It is going to take the country to elect a PM with the strength of Mrs. Thatcher to drain this swamp.

    1. Donna
      October 24, 2021

      The Establishment will never allow someone with the strength and ability of Mrs Thatcher to become PM again.

      Self-interest comes first: and a strong, determined, independent-of-thought PM is not in their interests. We will only ever be offered a choice between Beige or Grey.

  31. X-Tory
    October 24, 2021

    Until public officials who make mistakes are sacked nothing will ever improve. But the government is too weak and cowardly to do this. So the civil service will continue to get everything wrong, just as it has been doing for the last half century, at least. There is no prospect of any improvement. Sacking the incompetent morons is the only solution.

    1. The Prangwizard
      October 24, 2021

      You wholly correct x-tory. Complacency, complete protection, and safety from remedial action is all pervasive throughout all elements of our administration. No-one is interested in putting wrongs right – they all operate from the same ‘club’, behind heavy doors.

  32. Bill B.
    October 24, 2021

    Dud forecasts from the OBR? Is it based at Imperial College London by any chance?

  33. Margaretbj.
    October 24, 2021

    It’s similar to all situations John.Get the premise wrong and every which follows becomes less accurate and in terms of growth or decline from that premise continues to expand in it’s mistakes.For every scenario, academics have been taught to focus , which means excluding side arguments of value to the whole.They seem unimportant at the time but grow exponentially to the central issue and then eventually distort the original argument.

  34. Margaretbj.
    October 24, 2021

    Everything which follows.

  35. Paul Cuthbertson
    October 24, 2021

    Nothing will change until the WHOLE rotten system is cleared out.
    Cummings was removed because he upset the status quo, jobs for the boys.
    Follow the money.

  36. miami.mode
    October 24, 2021

    Rather than pay a visit to Blackpool the OBR can now access fortune tellers by telephone – only Ā£10 for 10 minutes and they can even pay with a government credit card!

  37. R.Grange
    October 24, 2021

    But how far can you trust predictions of any kind? The Financial Times is reporting a study suggesting that Pfizer’s Covid vaccine sales will reach $54.5 billion in 2022 and Modernaā€™s will hit $38.7 billion. I mean, how likely is that?! As for the report that profit margins on Covid vaccines reach 69%, I find that ludicrous. It must be… surely?

  38. Remington Norman
    October 24, 2021

    John, the civil service has been shown to be grossly incompetent in several areas – NHS, defence procurement. Home office, DVLA etc – yet nothing is being done to sort this out. Incompetents are recycled through the revolving door of preferment, no one is dismissed as they would be in a normal company environment. This government is a disgrace.

    If you are concerned about ‘wrong’ official forecasts, look at the absurd, scaremongering, climate predictions from the IPCC and others which inform the government’s ‘net zero’ policy. Try a few facts: 1. The UK produces 0.9% of the worlds CO2 emissions, so even shutting down our economy would have no impact on climate. 2. Climate is cyclical, not linear, so extrapolations from temperature graphs are meaningless; the globe had significant warming and cooling over the centuries and this is likely to continue regardless of human emissions; 3. If you really are concerned about CO2, then take note of the chinese declared intention to commission 600 coal-fired power stations in the coming years to support their Belt & Road initiative.

    It makes no sense to cripple our economy – and make no mistake, that is what the move to net zero will do – in the face of global strategies. COP26 is a waste of. time and resources. We should concentrate on reducing air pollution, protecting the environment from toxic chemicals – eg in soil crops – and get on with our lives without this counter-factual eco nonsense being foisted upon us.

    While you are at it, please get rid of Boris Johnson. It was difficult to envisage a leader worse than Cameron or May, but we have found one. Bring the Conservatives back to core conservatism, otherwise you will lose support on a climatic scale!

  39. paul
    October 24, 2021

    Government public pension for it workers come to 95 billion pound a year not including council workers, government old age pension come to 70 billion pounds a year, to which 19% also goes to government workers. Out of 165 billion a year spent on pension by the gov 113.5 billion goes to it own workers.

  40. Derek Henry
    October 25, 2021

    Brilliant John,

    Excellent infact….

    So why are the borrowing forecasts always wrong ?

    The borrowing forecasts are always wrong because

    1. The government budget deficit is the private sector surplus

    2. The national debt is just the part of that surplus we move into sterling bonds and put in our pensions and savings portfolios.

    They never know in advance how much each and everyone of us are going to save from our income.

    Thus it is a projection they always get wrong.

  41. Peter2
    October 25, 2021

    That is ridiculous DH.
    Even if we believe your MMT economic theory the modelling should be more accurate.
    History shows they are too pessimistic on deficit predictions.
    They should modify their models.

    1. Derek Henry
      October 26, 2021

      Morning Peter,

      Hope you are well.

      It is not a case of believing MMT economists Peter.

      The real data graphs show it. There is no dispute on the matter.

      It is called the UK sectoral balances and the ONS provides the data via its sectoral accounts it publishes every quarter.

      Here’s Goldman’s top economist Jan Hatzius talking about the sectoral balances.

      https://www.businessinsider.com/goldmans-jan-hatzius-on-sectoral-balances-2012-12?op=1&r=US&IR=T

      Real data graphs always cut through ideology Peter.

      1. Peter2
        October 26, 2021

        It isn’t an ideology for me any more than your own opinion about the MMT is an ideology.
        The fact two things balance is irrelevant.
        It doesn’t prove causation.

        I hope in some ways you are right because other economic theories say the current amount of increase of money supply will lead to growing levels of inflation.
        Which we are starting to see already.
        PS
        Whatever school of economics one might favour it still remains that there is a noticeable trend of the OBR getting predictions wrong and generally being pessimistic.
        They should modify their models and try to improve.
        Simple as that.

        1. Derek Henry
          October 26, 2021

          The OBR and IFS are both useless.

          I’m delighted we can agree on that.

          Instead of butting heads all the time.

          In the end we both really want Brexit to work Peter.

          šŸ™‚

  42. XY
    October 26, 2021

    “The main reason is the OBR and Treasury underestimate the buoyancy of revenue in an upswing, and have false models of tax revenues which depress revenues when you cut rates without allowing for behavioural effects which increase transactions and output with lower rates.”

    Indeed. The so-called Laffer Curve effect (although Laffer only drew this on a napkin in a restaurant as a rough explanation, it was never formally modelled).

    It is shocking that Chancellors are so easily captured by the Treasury into their foggy way of thinking.

    We have real-life examples of tax cuts increasing revenues. The post WW2 German economy for one – wildly successful.

    A less-known one is JFK’s US administration. JFK campaigned on lower taxes because he believed the State shouldn’t take so much from individuals, not because he believed in its effect on revenues. In fact, their expectation was that they would have lower revenues as a result. You can guess the rest – they cut taxes… and revenues went up.

    Re growth target. Probably… however, I’m interested in the economists who believe that the drive for perpetual growth is not best.

    1. It leads to self-defeating policies, such as immigration to fuel growth, which means you need more GDP to look after more people – which is an effective stand-still for society while leading to a worsening life experience in a country with too many people and to many clashing cultures.

    2. It can lead to ever-increasing giant blobs of money looking for a place to live. This results in poor investment choices, such as sub-prime mortghages and can lead to financial instability.

    I’d be interest in your take on these approaches, perhaps in a separate piece. (Please note: I don’t check back for replies to posts here).

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